It may be that by 2003 Intel won't have a choice but to go with Rambus, like it or not. Or it may be that they will put their resources into a better alternative that we can't foresee. I guess that's why they call risk (though one could argue that the same holds true for QCOM).
I completely agree with this statement from Dr. Id. I spent one horrific weekend in late December researching memory technologies and alternatives to RDRAM. The conclusion I came away with is that at present there is nothing in the pipeline that can compete with RDRAM. DDR-II is what is mentioned the most, and we've discussed this.
I see Rambus positioning themselves to be the gorilla, as powerful as any other, with enormous switching costs to the industry, of the DRAM market and spreading out from there.
As with any gorilla, they are always susceptible to discontinuous technologies. Certainly something may develop by 2003 or 2004 which Intel may be able to turn to. However, the hassle and expense to switch to this new memory system will be at least as great as the hassle and expense INTC has gone through to switch to RDRAM. By 2003 RDRAM should be cheap and embedded into all the DRAM manufacturers as much as SDRAM is today, and EDO was before SDRAM.
Rambus has already developed the next generation, and if I remember right even the generation after that of RDRAM technologies. Any discontinuous technology would have to at least equal this performance and do so at a better price. In fact, it will have to most probably out perform RDRAM at least by the same degree, if not more, than RDRAM outperforms SDRAM, because any new memory technology, given the need for volume production to reduce the cost of the memory, will be at a good premium to the cost of RDRAM.
Thus, it is just my opinion, but RMBS is as sticky as any other major gorilla candidate we follow with equal switching costs. It is also as subject to discontinuous innovation, but also as resistant.
In regard to NTAP and QCOM. I rode NTAP up as a 10 bagger in the last year, I also road QCOM up as a 6 bagger, then converted it into a 10 bagger into RDRAM (for a 60), so I have nothing but the highest regard for both companies. But in comparison to NTAP and QCOM, Rambus is far undervalued compared to its future potential than NTAP and Q. Some may even call NTAP ahead of itself, and QCOM about right at this point in time. But because of the added risk of litigation, and the occasional comment, like that from INTC, Rambus has reached a very compelling valuation. The upside I feel from owning Rambus will surpass the enormously attractive 50%+ CAGR per year from owning NTAP and QCOM, particularly when exercised through 2003 LEAPS.
Tinker
P.S. one codicil to measure my judgment, I also own 62 LEAP contracts on Globalstar, and thinking of adding. The risk/reward is superb. I guess I'm a bit more willing to buy into extreme risk/reward situations before they have fully worked themselves out and the market has had a chance to fully reevaluate the companies. I want these extraordinary returns, and I feel that 99% of the time I can do so at much reduced risks by seeing through the FUD and getting to the gist of the problem.
This said, no, I don't know if RMBS will win its litigation, but it seems extremely likely; (2) I don't think INTC can change course now from RMBS and I don't see anything they could change into if they wanted to (but I can't say for sure) and (3) I don't know if GSTRF won't go bankrupt, but as an entrepreneur I feel it working; and (4) both companies have gorilla metrics up the yazoo, just both are still in the process of moving their way up the product adoption curve and/or establishing themselves up that curve.
Well, had a few more thoughts, but I can see the wife signalling me time to go for dinner. I'll have a few thoughts on IRF later. |
